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China International Capital Corp (CICC) on Monday started its initial public offering in Hong Kong in what analysts expect to be a challenging fundraising bid given the uncertainty over the mainland's capital market reforms and shaky market sentiment.

China Reinsurance, the country's only reinsurance group, saw its share price flatline at its offering price of HK$2.70 after its debut yesterday.

CICC, the first Sino-foreign joint-venture investment bank, plans to sell 611.41 million shares at a price range of HK$9.12 to HK$10.28, which could help it net roughly HK$5.17 billion.

Chief executive Bi Mingjian said the company "has been restricted from developing business due to insufficient capital base" and that the listing would unlock its true potential.

"CICC does have a special positioning based on a strong network. That helps its institutional brokerage business," said a senior non-banking analyst at a state-owned institution in Shanghai who asked not to be identified.

"However, as more centrally administered state-owned companies have already gone public and more private companies emerge, CICC seems to be losing its edge. As for its political connections, it is not a 100 per cent bonus. Some people like it, others avoid it."

Founded in 1995 by China Construction Bank and Morgan Stanley, CICC has been associated with big names, including Levin Zhu, son of former premier Zhu Rongji, who had been its chief executive since 2004 before resigning last October.

Wang Qishan, one of the seven members of the apex Politburo Standing Committee, was the first chairman of CICC.

CICC's price range translates into 1.2 to 1.3 times its book value, analysts said, in line with its Hong Kong-listed peers.

A research report by Gaohua Securities last week said: "CICC's position in domestic capital market weakened since 2010 partly due to less active capital raising by large SOEs".

CICC's share in the equity capital markets in terms of underwriting amount slipped from first place in 2010 with 12.9 per cent to sixth place with 3.2 per cent last year, according to data provider Wind.

As Beijing froze the listings market after the stocks rout in April, the bank's listings business has also been under pressure.

Gordon Tsui, executive director of Hantec Group International Finance, said the timing of CICC's offer was not ideal although local investors tend to buy strong state-backed firms.

"Theoretically the atmosphere is favourable as Beijing has cut interest rates and Europe is sending easing signals, but the secondary market sentiment still seems fragile. Just look at China Reinsurance," he said.